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With Brexit Talks Sputter, Hammond Makes a Pitch for Finance

(Bloomberg) -- As the U.K. races the clock to save Brexit talks, Chancellor of the Exchequer Philip Hammond tried to reassure the world of finance about his government’s aim to preserve London as a world-leading financial center.

“Of course, our negotiations with the EU are in a critical phase and getting the right deal and an implementation period to allow us to adjust to it will be vitally important in the short-term,” Hammond said at an annual dinner organized by industry lobby group TheCityUK in London.

Hammond, who voted against the U.K. leaving the European Union, has long been an advocate for an extended grace period that will allow businesses and financial services to adapt to the reality of Brexit. Some banks plan to leave London for Frankfurt and Dublin while others await to see what kind of transitional arrangements the government will forge.

What Next?

But their confidence in the ability of Prime Minister Theresa May to deliver on a two-year transition phase -- to allow them to flesh out contingency plans while Brexit talks continue -- took a knock on Monday when a much-anticipated deal to move talks on the transition and trade were derailed by her Northern Irish ally over the delicate issue of what to do about the border with Ireland.

May is now scrambling to get talks back on track and the future of talks is entirely uncertain ahead of a key summit next week. Hammond sought to strike a reassuring note.

“You will forgive me if I don’t offer a blow-by-blow commentary of the last 48 hours,” Hammond said. “But I can tell you that we have made good progress in the negotiations over the last few weeks and I am optimistic that we will achieve sufficient progress at the Council next week, and move on to the next stage of the negotiations.”

Brexit Secretary David Davis told the U.K. Parliament Tuesday that he wanted the whole country to remain close to economic regulations after leaving, including in the key area of financial services.

“I have every confidence that we will reach an outcome that supports the U.K.’s position as the number one global financial center,” Hammond said.